TREASURIES-Prices steady ahead of record 3-year note sale

Mon Nov 9, 2009 2:16pm GMT
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* U.S. Treasury to sell a record $40 bln 3-year notes

* Appetite for risky assets curb safety bids for bonds

* No major data on tap after Friday's payroll report

By Richard Leong

NEW YORK, Nov 9 (Reuters) - U.S. government debt prices were steady on Monday before a record $40 billion auction of three-year notes, part of this week's $81 billion quarterly refunding.

Appetite for Treasuries was also curbed by a pickup in investors favoring stocks and other risky assets in the wake of a pledge by the Group of 20 industrialized nations over the weekend to stick to measures to bolster the global economy.

Still, analysts predict solid demand for the three-year supply as investors could earn an extra 0.50 percentage point in yield than two-year notes in exchange for taking slightly more interest rate risk.

"Some folks might look at three-years as the optimal part of the front end to own now," said George Goncalves, head of fixed income rates strategy with Cantor Fitzgerald in New York.

Following the three-year auction, the Treasury will sell $25 billion in benchmark 10-year notes on Tuesday and $16 billion in 30-year bonds on Thursday.  Continued...

 
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